(MENAFN - Khaleej Times) The UAE real estate market is set to witness a strong return on investments in the range of nine per cent to 12 per cent per annum, which will be a major attraction for investors.
The realty sector is on a very strong growth trajectory and offers a huge growth potential in the coming months for the investors, according to a research note by Tasweek Real Estate Development and Marketing.
The study revealed that the contribution of the UAE real estate sector to the country's gross domestic product (GDP) would touch Dh111.4 billion in 2013, which is expected to further rise to Dh118 billion by the end of 2014. The sector's contribution to GDP was Dh108.2 billion in 2012 and Dh99 billion in 2009.
The rising confidence and the strong fundamentals in Dubai and Abu Dhabi have led the growth in the real estate sector of UAE, the Tasweek study said.
"The UAE real estate fundamentals are set for a steady growth in the next few months, driving the overall optimism and growth potential on offer, due to the consistency and consolidation witnessed in the primary markets of Dubai and Abu Dhabi," Masood Al Awar, chief executive officer of Tasweek Real Estate Development and Marketing, said in a statement to Khaleej Times on Tuesday.
Based on market intelligence, the research suggested a major spur in the growth with increased investor activity across a wide spectrum of real estate projects in both Abu Dhabi and Dubai. These projects will increase the amount of spending which will stimulate job creation, he said.
"2014 will mark a major change in the growth of the UAE real estate sector, specially that world economic recovery started with eurozone comeback and US housing growth pushing the mortgage lending and interest increase all of which will become more robust and sustainable," the research said.
"The prospects are good for the UAE's endured property market rally as Abu Dhabi and Dubai as a preferred global real estate hub provide sufficient boosts to maintain momentum through next year," said Al Awar.
The study emphasises very positive growth for the real estate in Abu Dhabi, with price stabilisation and recovery in select areas, driven by the unveiling of mega projects such as the Dh246 billion developments in the Western Region, which will positively impact the sector. The residential and retail rental values in Abu Dhabi are also set to grow exponentially amidst the decision of the Executive Council to disengage itself from the annual rental cap in November 2013, the study said.
The Dubai market increased by over 10 per cent since the beginning of 2013, driven by the strong governmental support and improving confidence in the market, the Tasweek study noted.
Moreover, the successful bid to host Expo 2020 will have a good payoff in terms of return on investments which contributes to attracting foreign capital as well as local investors. This will have a significant impact on the growing demand for real estate units of various kinds in Dubai over the next three years, it suggested.